LOGCAP Military Contract
Halliburton's largest government contract is with the United States Army Corps of Engineers. Under the contract, known as "LOGCAP" (or Logistics Civilian Augmentation Program), Halliburton is responsible for providing supplies and services to the military on a global basis. Some of the typical civil logistics carried out under the contract are the construction of military housing for the troops, transporting food and supplies to military bases and serving food at military cafeterias.###
The military has always used private contractors to carry out civil logistics, but not to a great extent. In 1985, the military created LOGCAP with the purpose of privatizing more of the duties involved in civil logistics. The military first used LOGCAP in 1988 to construct and maintain two petroleum pipeline systems in Southwest Asia in support of contingency operations. But most of the military's civil logistics activities were still not privatized.
It was Dick Cheney, as defense secretary in 1992, who spearheaded the movement to privatize most of the military's civil logistics activities. Under the direction of Secretary Cheney, the Pentagon paid $9 million to Halliburton's subsidiary, KBR, to conduct a study to determine whether private companies like itself should handle all of the military's civil logistics. KBR's classified study concluded that greater privatization of logistics was in the government's best interest. Shortly thereafter, on August 3, 1992, Secretary Cheney awarded the first comprehensive LOGCAP contract to KBR. The Washington Post reported "The Pentagon chose [KBR] to carry out the study and subsequently selected the company to implement its own plan." Three years later, in 1995, Halliburton hired Cheney as its CEO.
In 1997, two years after Cheney became CEO of Halliburton, KBR's LOGCAP contract was not renewed and the government alleged the company engaged in fraudulent billing practices. The independent auditing arm of Congress, the GAO, had criticized KBR's performance during America's war in the Balkans. GAO said KBR's cost-overruns in the Balkans inflated the original contract price by 32 percent. After KBR was effectively fired by the Army in 1997, the LOGCAP contract was awarded to Halliburton competitor DynCorp. But, after Cheney became vice president in 2001, DynCorp was fired and KBR was re-awarded the contract.
Today, 90 percent of KBR's work under LOGCAP is being done in Iraq. Over 24,000 Halliburton employees and subcontract workers are employed to carryout LOGCAP in the Iraq-Kuwait region.
Halliburton's revenue from LOGCAP increased from $320 million in the second quarter of 2003 to over $2 billion in the fourth quarter of 2003. As of May 2004, the federal government had spent nearly $5 billion on LOGCAP since KBR became the sole contractor in 2001. The original value of LOGCAP in Iraq was estimated at over $4 billion, but the value of the contract is now over $8 billion and could reach $18 billion. These values can change as war conditions change. The $8 billion figure for Iraq does not include KBR's LOGCAP business in dozens of other countries around the globe, including Guantanimo Bay, Cuba, where it constructed the prisons used to house prisoners from Afghanistan.
KBR also performs duties under a second military contract called "Restore Iraqi Oil" (RIO). This contract, valued at $1.2 billion, is unrelated to LOGCAP. Under RIO, KBR is repairing Iraq's dilapidated oil industry in the southern part of the country.
In the 12 months following the fall of Saddam Hussein, KBR had built 64 dining facilities in Iraq and Kuwait, served more than 40 million meals to troops, washed more than a million bundles of laundry, collected over 1.5 million cubic meters of trash and delivered more than 8 million bags of mail.
KBR has more than 700 trucks in the region for delivering supplies to the U.S. military.
In the 13 months following President Bush's "Mission Accomplished" speech, thirty Halliburton's employees and subcontract workers in the Iraq-Kuwait region had been killed by violent ambushes orchestrated by Iraqi insurgents. The workers had been performing duties under the LOGCAP contract.
Reuters: Halliburton's role in Iraq -- from meals to oil
Congressman Henry Waxman website devoted to criticizing Halliburton contracts
Statement of Congressman Waxman on Iraq contracts
LOGCAP official website
GAO report on Halliburton's LOGCAP contract in Bosnia
GAO abstract of report on Halliburton's LOGCAP contract in Bosnia
Washington Post: Halliburton's Deals Greater Than Thought
World Policy Institute: New Data Shows How Contractors Are Cashing In On War On Terror
Iraq reconstruction contracts awarded by the U.S. government
LOGCAP task orders from 2001 thru Spring 2003 (Microsoft Excel Format)